While we continue to grapple with just how huge our emerging mining district likey is I thought I would add emphasis today on the value of waiting for higher metal prices for use in a BFS and an NPV based buy-out
So while the potential of greatly expanding our resource base is certainly there we must not forget that mearly waiting another 8-9 months will have a dramatic effect on our valuation. In my analysis below I am showing the significant 3-year average price increases despite my assumption of no increase in average prices for the remainder of 2012, i.e. assumed 2012 average metal prices will match 2012 Year-to-date average prices.
3-year average metal prices are at the heart of all of our valuations, and one that needs NO "discounting" for the sake of "conservatism" from us since 3-year average metal prices are widely used in valuing deposits.
The key to my message here is that the further we inevitably proceed into 2012 the more that the horrible 2009 prices fall off the 3-year average calc.
http://kltstore.kltannehill.com/copper/copper.pdf
CU
3-YEAR AVERAGE
08 09 10 11 12 (av. ytd)
$ 2.90 $2.47 $3.85 $4.00 $3.80
2010 3-year av. $3.07
2011 3-year av. $3.44 12% increase over 2010
2012 3-year av. $3.86 12% increase over 2011 3-yr and 26% over 2010 3-yr av.
AU
3-YEAR AVERAGE
http://www.kitco.com/charts/historicalgold.html
$870 $972 $1224 $1577 $1693
2010 3-year av. $1022
2011 3-year av. $1255 23% increase over 2010 3-yr av
2012 3-year av. $1496 19% increase over 2011 3-yr and 46% over 2010 3-yr av
AG
3-YEAR AVERAGE
http://www.kitco.com/charts/historicalsilver.html
08 09 10 11 12 (av. ytd)
$14.78 $14.67 $20.19 $35.11 $32.68
2010 3-year av. $16.61
2011 3-year av. $23.32 40%increase over 2010 3-yr av
2012 3-year av. $29.33 26% increase over 2011 and 76% over 2010 3-yr av.
Feb 2012 Drilling Results NR prices used:
Metal prices are copper $US2.50/pound, gold $US1,075.00/ounce, molybdenum $US17.00/pound and silver $US16.10/ounce.
http://www.copperfoxmetals.com/s/NewsReleases.asp?ReportID=507338&_Type=News-Releases&_Title=Copper-Fox-Locates-a-New-Zone-of-Copper-Mineralization-1200M-North-of-the-K
...
July 2011 Resource Estimates prices used:
*The copper equivalent ("Cu Eq.") cut-off calculation is based on metal prices of 1,200 US$/oz gold, 2.90 US$/lb of copper and 15.95 US$/lb of molybdenum, a mining cost of $1.35 US$/t mined and a processing cost of 5.12 US$/t milled.
...
http://www.copperfoxmetals.com/s/NewsReleases.asp?ReportID=466137&_Type=News-Releases&_Title=Measured-and-Indicated-Resource-Estimate-Exceeds-1-Billion-Tonnes-at-Schaft
Another price comparison (disclaimer: doesn't account for selling costs)
CU
39% higher than price used in Feb 2012 drilling results NR
2012 3-yr av. spot is 33% higher than price used in July 2011 RE2
2012 3-yr av. spot is
AU
2012 3-yr av. spot is 25% higher than price used in July 2011 RE2
2012 3-yr av. spot is 54% higher than price used in Feb 2012 drilling results NR
AG
2012 3-yr av. spot is
82% higher than price used in Feb 2012 drilling results NR
